Following the large take from the ECB lending window from European banks, ECB Pres Draghi speaks at 11am along side BoE Gov King and he’ll likely emphasize the success of the 3 yr lending facility as to distract attention from those who want him to act more forcibly, aka more aggressively buy European sovereign debt and not sterilize the purchases. There is a daily debate on the euro with the question always asked ‘how can the euro be at 1.30 and not much lower vs the US$ in light of everything going on in Europe?’ and I continue to say, in terms of currency debasement, the ECB has not behaved like the Fed, for now. The Italian Senate will vote today and likely approve the Monti budget after the lower house voted yes last week. Monti gave an ‘Uncle Sam needs you’ line by saying its essential that Italians buy government bonds. Greek creditors are pushing back against the IMF’s call for them to accept a below 5% coupon on newly exchanged bonds. With the Greek 2 yr note trading at .25 on the euro, these creditors should be thankful they are getting back .50. In Asia, the Shanghai index fell for the 14th day in the past 17 to just shy of the lowest level since Mar ’09.

Category: MacroNotes

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